Nigel Evans
Main Page: Nigel Evans (Conservative - Ribble Valley)Department Debates - View all Nigel Evans's debates with the HM Treasury
Finance Bill
Nigel Evans ExcerptsMonday 27th April 2020
(4 years, 7 months ago)
Commons ChamberRead Full debate Finance Act 2020 Read Hansard Text Read Debate Ministerial Extracts
Kim Johnson (Liverpool, Riverside) (Lab) [V]
We are living in unprecedented times. Since the Prime Minister announced the police-enforced lockdown on 23 March, the country has experienced the biggest challenge it has had to face in a long time. During the weeks since the lockdown, I have received a high volume of correspondence from non-essential businesses forced to close and from constituents experiencing financial hardship and uncertainty during this crisis.
The Riverside constituency covers Liverpool city centre, with a large number of leisure and hospitality businesses, hotels, micro-businesses, universities, private dentists’ practices, and freelancers and the self-employed engaged in a variety of enterprises. It is vital that the coronavirus economic schemes are effective so that we can protect people’s incomes, jobs and businesses, and prevent a deeper and longer-lasting recession.
The current guidance states:
“The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief… This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.”
By tying eligibility for these grants to the business rate relief schemes, there are unintended consequences that will result in legitimate businesses, which are contributing to the economy through the tax system, not being supported through the scheme as was originally envisaged by the Chancellor.
In Liverpool, Riverside there are thousands of community businesses and charities providing essential frontline public health and wellbeing services to our most vulnerable residents that are not eligible for the grant and face closure. It would appear that the criteria being applied by some local authorities are resulting in a large number of small businesses not having their applications approved, and this is specifically the case in a number of circumstances.
Businesses that occupy separate designated office space under their tenancy licence agreement pay a contribution to the shared business rates in managed workspaces where one rateable value is applied to the whole building. This is often advised as the most appropriate method for business rates collection by the business rates officer. Social enterprises can have many structures, and one such is charitable status. It has been suggested that as these small businesses receive mandatory relief for charities, not small business rate relief, they will not be eligible for this grant.
CBILS has been operational since 23 March, but as of Thursday 16 April, only 6,020 loans, worth £1.1 billion, have been made as part of the scheme, with the survey data indicating that just 1% of firms have been able to access it. The Government will provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs. However, the commercial banks are not acting in a consistent way, nor are they operating in the spirit of the guarantee. Banks are pushing their own products and seeking collateral security from the business owners rather than the business interruption product. Not all banks are offering the scheme, and other banks offer it only to their current customers. There is significant variation in the interest rates being charged to small businesses, and the terms and conditions and rates being offered, despite interest rates being so low, can only be described as extortionate.
The Government must act to increase the uptake of CIBLs, including offering a 100% guarantee, as other countries have. Providing 16,000 loans in four weeks in a country with nearly 6 million SMEs is not good enough. The Government must recognise that the scheme is not working adequately and change it urgently. The future of many of our small firms depends on their decisions.
The Government should also act urgently to protect the incomes of those who are falling outside existing schemes and on to universal credit. There are 9,000 self-employed people in Liverpool, Riverside, many of whom are creative freelancers working in our film, theatre and music industries who have seen their income dry up overnight. The self-employment income support scheme is intended to support self-employed individuals who have lost income due to the pandemic. The scheme allows self-employed people to claim a taxable grant worth 80% of trading profit, up to a maximum of £2,500 per month, for the next three months.
But there are anomalies. Newly established businesses that have submitted their first tax return for part of a year will have the self-employment income scheme 80% profit assessed for a whole year on this amount. While waiting for assessment and the release of the self-employed income support grant in June or July, self-employed people with no income are advised to apply for universal credit. This application results in immediate cancellation of any other benefits to which they are currently entitled, such as working tax credit, housing benefit and council tax benefit, leaving them with no income and in some cases destitute. Self-employed people with personal business savings of more than £16,000 are not entitled to universal credit or associated benefits. They are expected to use their savings to subsidise their income. This compares with the larger businesses—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I am terribly sorry, but we have run out of time there. I call Miriam Cates.
Mr Mark Harper (Forest of Dean) (Con) [V]
The Financial Secretary, who opened the debate and is my constituency neighbour, made the point that the Budget seems like a very long time ago. It does to me too, having spoken in the Budget debate. The concerns we expressed then do not seem quite so present today, with the Government having to deal with the huge threat from coronavirus. I want to make several national points and then I want to raise with the Minister a couple of issues that are specifically relevant to my constituency.
My first point is that we have heard a lot of talk about how we exit lockdown, but I think it is much more relevant to talk about a recovery plan. We are going to be living with coronavirus until we either find a vaccine or until we have a successful treatment. It is possible—I hope it is not the case, but it is possible—that we never find a vaccine, so we need to think about how we enable the economy to operate with this virus. It is going to be with us for some time. I have one question for the Minister, relating to the fifth test, on how the Government wish to start easing restrictions. When it was first set out by the First Secretary, the Government said that they wanted to avoid a second peak in cases, which would overwhelm the NHS. We all, rightly, want to avoid that. However, in the slides published today, that caveat at the end about overwhelming the NHS had disappeared. It seems to me that that is a very important omission, because, as we relax restrictions, we will inevitably see more cases. The question for us is not whether we will see more cases, but whether we will see them at a level that is able to be dealt with by our fantastic NHS. I therefore hope the Minister can answer the question about exactly what that fifth test is.
The second point I wanted to raise is about openness and how we develop that plan. I am pleased that the Prime Minister, in his very welcome statement today on his return to Downing Street, confirmed that the Government would work as openly as possible as they set out their case. He said, for example, that they would look at bringing with them industry, constituents and Opposition parties as they develop their plan. I want the Minister, as we bring industry in, to think about the businesses that will have to change their business models to reflect the fact that social distance will be with us for some time, and to think about how we might help those businesses deal with the effects of coronavirus going forward.
My third and final national point, which was raised by a number of colleagues, is how we get economic growth to go sufficiently fast to deal with the debts we are going to have. We need to go back to the measures in the Finance Bill that were in the Budget relating to driving up research and development spend, and to driving up spending on education and skills. They will be critical.
The local points I wanted to raise have been raised several times in the debate already. They relate to the use of the rates system to qualify for grants. have a number of serviced offices and business parks, such as Vantage Point at Mitcheldean and the Newent business park, where individual tenants have rates rolled up into their rent. Because they are not ratepayers, they are not eligible for any of the grants that the Government are using to assist businesses in trouble. I urge the Minister to see whether there is a way that those small businesses can be helped with the valuable grants that have been raised.
My final point is again about the use of the rates system, with the £51,000 rate cut-off, which has already been mentioned in this debate. It means that some businesses in my constituency, particularly those in the leisure and tourism sector, find they are not eligible for any of the help that the Government have delivered, because there is a hard edge at that £51,000 cut-off. As others have said, if that could be tapered, it would be incredibly valuable and welcome. With those national and local points, I pay tribute to all those who have made this virtual sitting possible. It is fantastic to have been able to participate in this debate in the House from my Forest of Dean constituency.
Mr Deputy Speaker (Mr Nigel Evans)
Order. To finish at 10 past nine, I call Ian Byrne.
The Economic Secretary to the Treasury (John Glen)
It is a privilege to close this debate on behalf of the Government. This is my first opportunity to congratulate the newly appointed shadow Treasury team and to welcome the hon. Member for Houghton and Sunderland South (Bridget Phillipson) to the Dispatch Box. I also welcome the hon. Member for Oxford East (Anneliese Dodds)—I spent a lot of time with her in Committee debating Brexit matters before Christmas—to her role and welcome the constructive tone that she took in opening this debate.
In last month’s Budget, my right hon. Friend the Chancellor initiated a coherent, co-ordinated and comprehensive economic response to the challenges of covid-19. As the shocking impact of the virus around the globe has become more apparent, the Chancellor has announced further unprecedented packages of support, doing so most recently this afternoon, with the new bounce-back loan scheme and refinements to make the CBIL scheme more accessible—points that I am sure my hon. Friend the Member for Wellingborough (Mr Bone) and the hon. Member for Hackney South and Shoreditch (Meg Hillier) will welcome, given what they said in their speeches. Such measures may not be to the taste of true free marketeers such as my hon. Friend the Member for Wycombe (Mr Baker), or even my right hon. Friend the Member for North Somerset (Dr Fox), but when they and my hon. Friends the Members for Yeovil (Mr Fysh) and for North East Derbyshire (Lee Rowley) welcome them, we know that such measures must be necessary.
The hon. Member for Bethnal Green and Bow (Rushanara Ali) was among those who argued that we should invest in public services to protect frontline services—and we are. The Government have allocated more than £14 billion from the covid response fund to go towards public services, including the NHS and local authorities.
I recognise that some sectors of our economy are experiencing enormous disruption. My hon. Friend the Member for Altrincham and Sale West (Sir Graham Brady) highlighted the challenges faced by the aviation sector, which is of course eligible for the coronavirus jobs retention scheme, under which the Government will pay up to 80% of staff wages up to £2,500 a month. We have offered support to households, too, by increasing the universal credit allowance by £1,000; providing meals or vouchers for eligible home-schooled children in place of free school meals; and making nearly £1 billion extra available for local housing allowance.
I acknowledge that the task is by no means complete. As my hon. Friend the Member for Broxbourne (Sir Charles Walker) eloquently argued, our wellbeing and our economy are not in competition. The Government will do whatever it takes to safeguard people’s health and livelihoods as the situation develops. We will continue to back NHS workers and those who support them on the frontline—for example, by exempting from vehicle excise duty medical courier vehicles that transport medical products and by reforming the tapered allowance so that doctors can spend more time treating patients without facing a higher tax burden.
As my hon. Friend the Member for North East Derbyshire reminded us with his reference to the 93-year wait for a bypass in his constituency, the Bill also delivers on commitments made to the British people at the general election in December. It is vital that these measures are not delayed. The Bill furthers the Government’s ambition to unleash the potential of our economy by increasing the credit rate for research and development expenditure credit and for the structures and buildings allowance—measures welcomed by my hon. Friends the Members for Meriden (Saqib Bhatti), for Stourbridge (Suzanne Webb) and for Penistone and Stocksbridge (Miriam Cates).
The digital services tax will improve the fairness and sustainability of our tax system by ensuring that digital businesses that access the UK market make a fair contribution to the Exchequer. It is anticipated to collect £2 billion in revenue. I welcome the support expressed from all parts of the House for the concept of a digital services tax, and thank the Chair of the Treasury Committee, my right hon. Friend the Member for Central Devon (Mel Stride), for his remarks on the subject. I acknowledge the work that he did on the matter while in government. I also note his reference to the need for better data on the loans scheme; the Government will address that and his letter will be responded to shortly.
The Bill reduces the tax burden on some of the most vulnerable and deserving members of our society, including the Windrush generation and victims of the troubles, for whom compensation will no longer be subject to income, inheritance or capital gains taxes. Kindertransport payments made by the German Government will no longer be subject to inheritance tax either.
This Bill helps in the Government’s efforts to move towards a greener and more sustainable economy, as mentioned by the right hon. Member for Kingston and Surbiton (Sir Edward Davey), and confirms that the CO2 emissions figures for vehicle excise duty will be based on the worldwide harmonised light vehicle test procedure for all new registered cars from 1 April 2020. In addition, zero-emission cars will no longer be subjected to the VED expensive car supplement. These measures will help to ensure that, as our economy develops and grows, it does not jeopardise our environment. I know that many of these measures will attract widespread support across the House. I thank Opposition Members for the constructive and collegiate approach that they have taken over the past few weeks. In that spirit, let me address some of the valuable points raised further in today’s debate.
The shadow Chancellor raised a number of important issues, including tax avoidance, which was also raised by the right hon. Member for Warley (John Spellar). This is a priority for the Government, and in last month’s Budget the Chancellor announced further measures, including legislation to strengthen HMRC’s existing anti-avoidance powers. The Government also plan to issue a call for evidence on the next steps to reduce or end the use of disguised remuneration schemes.
The shadow Chancellor also touched on the subject of entrepreneurs’ relief, a point echoed by my hon. Friend the Member for Weston-super-Mare (John Penrose). Most of the cost of this relief previously came from those making gains over £1 million. With such extreme gains now ineligible for this relief, we can ensure that the support is targeted where it was intended: at small businesses.
My hon. Friend the Member for Arundel and South Downs (Andrew Griffith) raised the prospect of a unified income tax and national insurance regime. The Government are indeed committed to a tax system that is simple and easy to use, which is why we created the Office of Tax Simplification in 2010 and put it on a permanent statutory basis in 2016. We have implemented more than half of the 400 recommendations that the OTS has made to date.
Tonight, this House once again has the opportunity to come together in the national interest. This Bill gives us the tools we need to mitigate the worst effects of the virus today, but it also lays the foundations that will allow our economy to return to strength in the months and years ahead. This is a Bill that will ensure that we truly have a 21st-century tax system: one that is not only competitive but fair and sustainable—a Bill that will help to deliver our commitment to zero carbon emissions by 2050, positioning the United Kingdom at the forefront of clean and sustainable future growth; a Bill that will help Britain to bounce back, levelling up investment and opportunity and putting in place the pro-enterprise policies that will ensure that this country remains one of the best places in the world to start and grow a business, a point made very eloquently in an informed speech by my hon. Friend the Member for South Cambridgeshire (Anthony Browne).
Through the action that the Government have taken, and with the support of the whole House, we will defeat this virus. We have heard speeches from the Shetlands to Central Devon, and from many constituencies in between. Everyone is committed to ensuring that the Government do everything they can to relieve the distress that our nation is now enduring. We will shepherd our country safely through this period of uncertainty and disruption. The United Kingdom will emerge from this crisis stronger, more resilient and more united than before. For all these reasons, I commend the Bill to the House.
Mr Deputy Speaker (Mr Nigel Evans)
I, too, would like to associate myself with the comments of the shadow Minister in thanking all those who have made today’s proceedings work so smoothly. Thank you very much.
Nigel Evans
Main Page: Nigel Evans (Conservative - Ribble Valley)Department Debates - View all Nigel Evans's debates with the HM Treasury
Finance Bill
Nigel Evans ExcerptsWednesday 1st July 2020
(4 years, 4 months ago)
Commons ChamberRead Full debate Finance Act 2020 Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 1 July 2020 - large font accessible version - (1 Jul 2020)
Mr Pat McFadden (Wolverhampton South East) (Lab)
I beg to move, That the clause be read a Second time.
Mr Deputy Speaker (Mr Nigel Evans)
With this it will be convenient to discuss the following:
New clause 1—Loan charge: report on effect of the scheme—
“(1) The Chancellor of the Exchequer must commission a review, to be carried out by an independent panel, of the impact in parts of the United Kingdom and regions of England of the scheme established under sections 20 and 21 and lay the report of that review before the House of Commons within six months of the passing of this Act.
(2) A review under this section must consider the effects of the provisions on—
(a) business investment,
(b) employment,
(c) productivity, and
(d) company solvency.
(3) A review under this section must consider the fairness with which HMRC has implemented the policy, including whether HMRC has provided reasonable flexibility around repayment plans with the aim of avoiding business failures and individual bankruptcies.
In this section “parts of the United Kingdom” means—
(a) England,
(b) Scotland,
(c) Wales, and
(d) Northern Ireland;
and “regions of England” has the same meaning as that used by the Office for National Statistics.”
This new clause would require a review of the impact of the scheme to be established under Clauses 20 and 21.
New clause 31—Restricting the loan charge to cases where taxpayer knew loan was taxable—
“(1) In Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) in paragraph 1(1)—
(a) at the end of paragraph (b) omit “and”; and
(b) at the end of paragraph (c), insert—
“, and
(d) if the relevant year is 2015/16 or an earlier tax year, one of the conditions 1 to 3 is met.”
(c) After paragraph 1(1), insert—
“(1A) Condition 1 is that—
(a) P submitted a return in accordance with section 8 of TMA 1970 for the relevant year,
(b) the loan or quasi loan was not accounted for in the return as income, and
(c) P knew that the loan or quasi loan should have been accounted for as income in the relevant year.
(1B) Condition 2 is that P has not been issued with a notice under section 8 of TMA 1970 for the relevant year.
(1C) Condition 3 is that P has been issued with a notice under section 8 of TMA 1970 for the relevant year but that notice is or has been withdrawn under section 8B(2) of that Act.”.
(2) In Schedule 12 to F(No.2)A 2017 (trading income provided through third parties: loans etc outstanding on 5 April 2019) in paragraph 1(2)—
(a) at the end of paragraph (a)(ii) omit “and”; and
(b) at the end of paragraph (b), insert—
“, and
(c) if the tax year in respect of which the loan or quasi loan should have been accounted for as income (or otherwise treated as a receipt of a revenue nature for income tax purposes) (“the relevant year”) is 2015/16 or an earlier tax year, one of the conditions 1 to 3 is met.”
(c) After paragraph 1(2), insert—
“(2A) Condition 1 is that—
(a) T submitted a return in accordance with section 8 of TMA 1970 for the relevant year,
(b) the loan or quasi loan was not accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes), and
(c) T knew that the loan or quasi loan should have been accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes).
(2B) Condition 2 is that T has not been issued with a notice under section 8 of TMA 1970 for the relevant year.
(2C) Condition 3 is that T has been issued with a notice under section 8 of TMA 1970 for the relevant year but that notice is or has been withdrawn under section 8B(2) of that Act.”.
This new clause provides that, in respect of loans made in 2015/16 tax year and any earlier tax years, the loan charge applies only if the taxpayer submitted their tax return and deliberately did not declare the loan to be income. The clause also extends this protection to taxpayers who were not required by HMRC to submit tax returns.
New clause 35—Review of Off-Payroll working (IR35) legislation—
“(1) The provisions of section 7 and Schedule 1 of this Act do not have effect unless the Treasury has conducted a review of Off-Payroll working (IR35) legislation and has laid a copy of the report of that review before both Houses of Parliament.
(2) A review under (1) must include assessment of—
(a) impact on individuals’ livelihoods,
(b) impact on individuals’ employment rights, and
(c) relevant business practices.
(3) Any review under (1) must be carried out no later than 31 December 2025.”
This new clause would provide that the IR35 provisions of the bill would not take effect unless the Treasury has conducted and published a review of off-payroll working legislation.
Amendment 16, page 2, line 23, leave out clause 7
Amendment 55, in clause 20, page 15, line 6, at end insert—
“(3A) An amount paid, treated as paid or due to be paid under a qualifying agreement is also a qualifying amount if—
(a) the amount is referable (directly or indirectly) to a qualifying loan or quasi-loan,
(b) the tax year in which an amount representing the loan or quasi-loan should have been accounted for as income (or otherwise treated as a receipt of a revenue nature for income tax purposes) (“the relevant year”) is 2015/16 or an earlier tax year, and
(c) one of the conditions 1 to 3 is met.
(3B) Condition 1 is that—
(a) the person to whom the income tax liability the agreement referred to in subsection (2) relates (“P”) submitted a tax return in accordance with section 8 of TMA 1970 for the relevant year, and
(b) the loan or quasi loan was not accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes).
(3C) However, condition 1 is not met if P knew that the loan or quasi loan should have been accounted for in the return as income (or otherwise treated as a receipt of a revenue nature for income tax purposes).
(3D) Condition 2 is that P has not been issued with a notice under section 8 of TMA 1970 for the relevant year.
(3E) Condition 3 is that P has been issued with a notice under section 8 of TMA 1970 for the relevant year but that notice is or has been withdrawn under section 8B(2) of that Act.”.
This amendment is consequential on the new clause “Restricting the loan charge to cases where taxpayer knew loan was taxable”. It provides that a prior settlement with HMRC can be unwound unless the worker failed to account for a 2015/16 tax year (or earlier) liability in his or her tax return deliberately despite knowing that the loan should have been included as income.
Amendment 17, page 85, line 2, leave out schedule 1.
Amendment 20, in schedule 1, page 97, line 15, leave out “2021-22” and insert “2023-24”
This amendment and 21 to 36 and 57 seeks to delay the introduction of the IR35 changes until the tax year 2023-24.
Amendment 21, page 97, line 17, leave out “2021” and insert “2023”
Amendment 22, page 97, line 21, leave out “2021” and insert “2023”
Amendment 23, page 97, line 23, leave out “2021” and insert “2023”
Amendment 24, page 97, line 25, leave out “2021” and insert “2023”
Amendment 25, page 97, line 26, leave out “2021” and insert “2023”
Amendment 26, page 97, line 38, leave out “2021” and insert “2023”
Amendment 27, page 98, line 4, leave out “2021-22” and insert “2023-24”
Amendment 28, page 98, line 8, leave out “2021” and insert “2023”
Amendment 29, page 98, line 12, leave out “2021” and insert “2023”
Amendment 30, page 98, line 30, leave out “2021” and insert “2023”
Amendment 31, page 98, line 34, leave out “2021” and insert “2023”
Amendment 32, page 98, line 37, leave out “2021” and insert “2023”
Amendment 33, page 98, line 40, leave out “2021” and insert “2023”
Amendment 34, page 98, line 44, leave out “2021” and insert “2023”
Amendment 35, page 98, line 45, leave out “2021” and insert “2023”
Amendment 36, page 98, line 47, leave out “2021” and insert “2023”
Amendment 57, page 97, line 36leave out ‘2021’ and insert ‘2023’
New clause 12—Assessment of impact of provisions of this Act—
“(1) The Chancellor of the Exchequer must review in parts of the United Kingdom and regions of England the impact of the provisions of this Act and lay a report of that review before the House of Commons within one month of the passing of this Act.
(2) A review under this section must consider the effects of the provisions on—
(a) GDP
(b) business investment,
(c) employment,
(d) productivity,
(e) company solvency,
(f) public revenues
(g) poverty, and
(h) public health.
(3) A review under this section must consider the following scenarios—
(a) the Job Retention Scheme, Coronavirus Business Interruption Loan Scheme, Bounceback Loan Scheme and Self-employed Income Support Scheme are continued are continued for—
(i) six months,
(ii) the next year,
(iii) eighteen months,
(iv) the next two years; and
(b) the Job Retention Scheme, Coronavirus Business Interruption Loan Scheme, Bounceback Loan Scheme and Self-employed Income Support Scheme are ended or changed in any ways by a Minister of the Crown other than as specified in (a).
(4) In this section—
“parts of the United Kingdom” means—
(a) England,
(b) Scotland,
(c) Wales, and
(d) Northern Ireland;
“regions of England” has the same meaning as that used by the Office for National Statistics.”
This new clause would require a review of the impact of the Bill in different possible scenarios with respect to the continuation of the coronavirus support schemes.
New clause 18—Review of changes in Act—
“(1) The Chancellor of the Exchequer must review the effect of the changes in this Act in each part of the United Kingdom and each region of England and lay a report of that review before the House of Commons within two months of the passing of this Act.
(2) A review under this section must consider the effects of the changes on—
(a) business investment,
(b) employment, and
(c) productivity.
(3) A review under this section must consider the effects in the current and each of the subsequent four financial years.
(4) The review must also estimate the effects on the changes in the event of each of the following—
(a) the UK leaves the EU withdrawal transition period without a negotiated comprehensive free trade agreement,
(b) the UK leaves the EU withdrawal transition period with a negotiated agreement, and remains in the single market and customs union, or
(c) the UK leaves the EU withdrawal transition period with a negotiated comprehensive free trade agreement, and does not remain in the single market and customs union.
(5) The review must also estimate the effects on the changes if the UK signs a free trade agreement with the United States.
(6) In this section—
“parts of the United Kingdom” means—
(a) England,
(b) Scotland,
(c) Wales, and
(d) Northern Ireland;
and “regions of England” has the same meaning as that used by the Office for National Statistics.”
This new clause requires a review of the impact on investment, employment and productivity of the changes made by the Act over time; in the event of a free trade agreement with the USA; and in the event of leaving the EU without a trade agreement, with an agreement to retain single market and customs union membership, or with a trade agreement that does not include single market and customs union membership.
Crispin Blunt (Reigate) (Con)
On a point of order, Mr Deputy Speaker. Forgive me; I might have missed the reason why are we are not going to be able to divide on new clause 31, but I would be grateful if you could explain it to me. I have today become the longest serving Member for Reigate since the Great Reform Act, so I might have missed one or two things that are going on, but I would be obliged if you could tell me why we are not going to have the opportunity to divide on new clause 31.
Mr Deputy Speaker (Mr Nigel Evans)
I thank the hon. Member for his point of order, but I think we have to wait until the end of the debate before these decisions are made.
Mr Davis
Thank you, Mr Deputy Speaker. I shall move on to the other issue that I want to discuss today.
Amendment 20 would delay the imposition of the IR35 rules from 2021 until April 2023. It is very unlikely that the economic crisis we are facing will be over by April 2021, and attempting to implement IR35 will cost jobs and do serious economic damage. A few months ago, the powerful Cross-Bench House of Lords Economic Affairs Committee wrote a report on IR35, and much of what I am going to say involves quotations from that report. I will start with this:
“It is right that everyone should pay their fair share of tax. But the evidence that we heard over the course of our inquiry suggests that the IR35 rules—the government’s framework to tackle tax avoidance by those in ‘disguised employment’—have never worked satisfactorily, throughout the whole of their 20-year history. We therefore conclude that this framework is flawed.”
It is right not to impose unnecessary burdens on business at a time like this. I agree with a great deal of what the right hon. Member for Wolverhampton South East had to say about the importance of preserving—and, indeed, not destroying—employment in the current circumstances. This goes right to the issue of IR 35. The report states that
“the government made this decision after considering the issue too narrowly, in terms of its tax take. It has severely underestimated the costs to business of implementing the changes…And it did not analyse sufficiently the unintended behavioural consequences of the proposed reforms or their wider potential impact on the labour market, and on the gig economy in particular.”
Many contractors in the coming years will be left in an “undesirable halfway house”. They do not enjoy the rights that come with employment, yet they are considered employees for tax purposes. In short, IR35 will create “zero-rights employees”. I am saying this directly to Labour Members, because the idea that a Government action can create a class of employee with zero rights is an issue close to their hearts. Such employees have no rights under employment law but under tax law they are employees.
The Lords Committee called on the Government to commission an independent review to devise a better implementation of the scheme. I think that is exactly right, which is why I want to see another two years before we implement whatever the decision is. We need that time to understand precisely what the effect of our new policy will be.
It would be a disaster if, in the context of the economic crisis and the growing gig economy, the Government accidentally created that class of zero-rights employees with no holidays, no sick pay, no pension, no redundancy —no employment rights whatsoever. We must stop that happening either accidentally or deliberately, and on that basis I ask the House to support amendment 20.
Taiwo Owatemi
I agree with my hon. Friend; that is completely wrong.
No business or individual should be left behind. Every livelihood deserves the chance to survive this crisis. Otherwise, who knows what impact it will cause? Where there are job losses, will the Government commit to retraining those workers, whether old or young, through a future jobs fund so that they can harness the jobs that will come out of the crisis? Those jobs should be part of a new, prosperous economy, and they should be green, well-paid and sustainable. We do not need a race to the bottom, the slashing of safety regulations or the austere measures that we have seen in the past 10 years. The Chancellor said that he would do “whatever it takes” and frankly that is the least that my constituents in Coventry North West deserve. We have seen 18 years of growth and millions of jobs lost in two short months. To restore dignity, to save jobs and create new ones and to stimulate this much-needed recovery, bold progressive action is required. Nothing less will do.
Mr Deputy Speaker (Mr Nigel Evans)
If Judith Cummins wishes to speak until 8.39, she may do so. Otherwise, I need to call the Minister.
Judith Cummins (Bradford South) (Lab)
I have 40 seconds. Thank you, Mr Deputy Speaker!
I want to comment on two things. The first is the beauty, aesthetic and wellbeing industry, which is far wider than the nail bars that the Prime Minister has flippantly referred to. It is a sector that contributes a hugely significant £6.6 billion to the UK economy, employs more than 300,000 people across the UK and provides 16,000 apprenticeships, yet it seems to have been forgotten. Hundreds of jobs are at risk. The industry needs clarity, and it needs it now. Those people want to know when they can go back to work. Also—
Jesse Norman
I take my hat off to the astonishing hon. Member for Bradford South (Judith Cummins), who brought so much content into such a short presentation, and I thank her for that. We have an enormous body of material to get through quickly, so I shall deal initially with the question relating to new clause 26 on job creation and related measures. The new clause would require the Government to conduct an assessment of the effect of the Act on job creation. As the House will know, the Government have announced unprecedented support through the coronavirus job retention scheme, the self-employed scheme and the like. The Office for Budget Responsibility has said that those actions will directly help to support the incomes of individuals. The Treasury does not produce economic forecasts and the OBR does, publishing them twice a year. For that reason, I ask Members to reject the new clause.
New clause 12 relates to a matter previously considered in the Public Bill Committee, the impact on regions and nations. The new clause would require the Chancellor, within one month, to review the impact of the Act. As I emphasised in Committee, the provisions in this Bill have already been developed with careful consideration. Analysis of Government decisions on GDP is also carried out by the independent OBR. Again, we will continue to monitor the impact of the crisis, but I ask Members to reject the new clause. SNP new clause 18 would require a review of the impact of the Act on investment, productivity and employment. Again, it would require the Government to look at hypothetical scenarios, whereas the OBR is required by law to produce its forecasts based on stated Government policy, so I ask Members to reject the measure.
I come now to IR35 and the off-payroll working rules. I have been pressed vigorously on this issue by my hon. Friends the Members for Milton Keynes North (Ben Everitt), for Guildford (Angela Richardson), for Workington (Mark Jenkinson) and for Barrow and Furness (Simon Fell). Amendments 16 and 17 seek to remove the reform of these rules from the Bill, which would be a serious mistake, costing the country many hundreds of millions of pounds. The level of non-compliance at the moment with the rules is scheduled to cost the country £1.3 billion in 2023-24 if not addressed. As I do not believe the SNP really wants that, I encourage Members to vote against it.
I come now to the cross-party amendments framed by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), as it is important to engage with several of the things he said. He said that contractors could be pushed into a state of no benefits employment. It is important to note the contractors already receive a number of benefits funded by the Government when they are employees of their own personal service companies. Such benefits include statutory maternity, paternity, adoption, parental bereavement and shared parental pay, and they are provided by PSCs, which are then able to claim 100% of those payments plus 3% compensation from the Government. My right hon. Friend said that at least seven people have taken their own lives as a result of the loan charge. It is important to put on the public record that of course every single death of an individual is a tragedy. The circumstances surrounding those deaths have been considered by the coroner, the Independent Office for Police Conduct and HMRC’s own internal independent investigations. None of them has suggested, in these four reports, that HMRC is to blame for these deaths; no conduct issues have identified either by the independent office or internal investigations that would warrant disciplinary actions.